Chongqing Model Fueled by Debts, Like Everywhere Else in China

choi

Tom Orlik and Lingling Wei, Behind a Chinese City's Growth, Heavy Debt; Borrowing fueled building in Chongqingunder now-ousted Bo Xilai, reflecting a broader economic dilemma. Wall Street Journal, Ape 23, 2012.
http://online.wsj.com/article/SB ... 59972617862832.html

My comment:
(a) The gist of the report is as follows: Victor Shih of Northwestern University estimates that 10 major investment vehicles which Chongqing used to fuel its growth accumulated 346bn yuan ($54bn) in liability, up from 162bn yuan in 2007. The numbers do not include debts of state-owned enterprises and of property developers, and also exclude a number of smaller investment vehicles. However, the practice is probably emblematic of most if not all other local governments (up to provinces)--and central government to some extent--since the 2008 financial crisis.
(b) The clause "Chongqing used to fuel its growth accumulated 346bn yuan ($54bn) in liability" comes directly from the report. It is ambiguous. However, the graphic indicates Chongqing cumulative debts of 346bn yuan in 2011 and 162bn yuan in 2007. In other words, Chongqing under Mr Bo Xilai increased debt of 346bn minus 162bn.
(c) There is no need to read the report.